and it's completely optional. unlike participating in the SS scheme, this is totally optional. no gun to your head on this one.

i just can't fathom a reason, other than fear, to prevent people from having even a little bit of control of their government-required savings account.

the only reason i can come up with is the fear that once people had a little control, and success, they would demand more. and then how would Congress fund projects without the SS money to dip in to.

open to being convinced otherwise.

Saul Good

08-26-2010, 10:51 AM

That would require the government to relinquish a tiny bit of control over our lives. Not going to happen.

HonestChieffan

08-26-2010, 10:51 AM

Irrational fear and the dems would lose the cash flow into the federal system and they cannot live without taking your money away from you.

Dayze

08-26-2010, 10:59 AM

..not to mention how many people who rely upon the 'war on drugs' would be out of jobs/on their way out of a job

alnorth

08-26-2010, 11:00 AM

The fear is basically some people being stupid, losing the portion they control, and then whining about not getting as much in retirement. We should just raise the retirement age a bit until it is Actuarially stable, reduce the benefit a bit for currently-young people if we absolutely have to, then leave it alone.

Politically, I feel this issue is just not worth pursuing at all. If you are not going to let me invest a huge chunk of it, say 50% or all of it, then it wont make much of a difference, and we have to spend a lot of political capital in a huge holy war to ever have a chance to do this for even a tiny fraction. We have bigger fish to fry.

talastan

08-26-2010, 11:10 AM

IMO the first thing a Fiscally Conservative congress (I know fairy tale right?) needs to do is lock out Congressional access to the SS fund for revenue. They need to protect these funds exclusively; especially if we have to pay into them for "our" benefit. I know this happening is incredibly unlikely but it would be a good step towards restoring the public's trust. JMO though...

HonestChieffan

08-26-2010, 11:13 AM

The fear is basically some people being stupid, losing the portion they control, and then whining about not getting as much in retirement. We should just raise the retirement age a bit until it is Actuarially stable, reduce the benefit a bit for currently-young people if we absolutely have to, then leave it alone.

Politically, I feel this issue is just not worth pursuing at all. If you are not going to let me invest a huge chunk of it, say 50% or all of it, then it wont make much of a difference, and we have to spend a lot of political capital in a huge holy war to ever have a chance to do this for even a tiny fraction. We have bigger fish to fry.

Then why wont they guarantee that whatever you put in will never fall and allow you the opportunity on the upside.....simple.

BIG_DADDY

08-26-2010, 11:25 AM

Because our morally and ethically corrupt government has turned SS into nothing more than their own personal slush fund. If you put your money in there would have to be actual accounts and therefore some form of accountability.

HonestChieffan

08-26-2010, 12:12 PM

Because our morally and ethically corrupt government has turned SS into nothing more than their own personal slush fund. If you put your money in there would have to be actual accounts and therefore some form of accountability.

wisdom.

bevischief

08-26-2010, 12:42 PM

Someone would have to blow up the Congress in full session to even think that this would have a chance of happening.

ChiefaRoo

08-26-2010, 05:38 PM

a small amount. let's say 2%-5%.

what are the arguments against that idea?

and it's completely optional. unlike participating in the SS scheme, this is totally optional. no gun to your head on this one.

i just can't fathom a reason, other than fear, to prevent people from having even a little bit of control of their government-required savings account.

the only reason i can come up with is the fear that once people had a little control, and success, they would demand more. and then how would Congress fund projects without the SS money to dip in to.

open to being convinced otherwise.

People are stupid and can't be trusted with their money/Democrats

KC native

08-27-2010, 12:10 PM

Wow, do you really want to give Wall Street access to, with their outstanding ethics track record, access to that reliable, steady, and tremendous stream of that cash?

Taco John

08-27-2010, 12:14 PM

Wow, do you really want to give Wall Street access to, with their outstanding ethics track record, access to that reliable, steady, and tremendous stream of that cash?

As opposed to congress?

Uh, yes.

One is a gamble. The other is just throwing money away with no expectation of reasonable return. That's an easy choice.

BIG_DADDY

08-27-2010, 12:17 PM

As opposed to congress?

Uh, yes.

One is a gamble. The other is just throwing money away with no expectation of reasonable return. That's an easy choice.

Native would rather provide Congress with a slush fund than actually have accounts and accountability. That's really all you need to know about native and where his heads at.

KC native

08-27-2010, 12:19 PM

As opposed to congress?

Uh, yes.

One is a gamble. The other is just throwing money away with no expectation of reasonable return. That's an easy choice.

ROFL Has SS not worked exactly as designed so far? If we make minor changes to SS then it stays solvent for the foreseeable future.

You are a joke.

KC native

08-27-2010, 12:20 PM

Native would rather give provide Congress with a slush fund than actually have accounts and accountability. That's really all you need to know about native and where his heads at.

Ah, Mr Paranoid graces us with his presence.

ChiefaRoo

08-27-2010, 12:21 PM

Native says - The Govt. will take care of you and is looking out for you. You know like when they experimented with Nukes in the 1950's and irradiated our own troops, like when they made sure we were safe after the Embassy bombings in the 90's so there wouldn't be a 9/11. Katrina, BP oil spill oversite and regulation. Securing our borders.

Anyone who trusts the Govt. to look out for them is going to get screwed.

KC native

08-27-2010, 12:25 PM

Native says - The Govt. will take care of you and is looking out for you. You know like when they experimented with Nukes in the 1950's and irradiated our own troops, like when they made sure we were safe after the Embassy bombings in the 90's so there wouldn't be a 9/11. Katrina, BP oil spill oversite and regulation. Securing our borders.

Anyone who trusts the Govt. to look out for them is going to get screwed.

That's not what I'm saying at all. Keep putting words in my mouth though. It helps you to look smart when you make up your own narratives.

ChiefaRoo

08-27-2010, 12:28 PM

That's not what I'm saying at all. Keep putting words in my mouth though. It helps you to look smart when you make up your own narratives.

I didn't mean to put words in your mouth. I am simply saying that I favor the individual making his own decisions on at least a portion of SS as opposed to Govt. oversite.

Amnorix

08-27-2010, 12:52 PM

As usual this thread has just turned into a mudslinging fest, and that's fine. I'll post something and then leave, as I don't have time for this at the moment.

The good news is that Social Security has worked more or less precisely as originally intended, and has been a successful program by nearly any standard one wishes to apply during its 70-odd years of existence.

The bad news, however, is that it is growing increasingly untenable, and needs a dramatic overhaul to continue to survive for very much longer. In order to disguise their profilgate spending, Congress and the President (Reagan) brought Social Security onto the budget, combining the SS receipts (which were net positive) with the general ledger (which was net negative), thereby hiding just how big the deficit was. There are, of course, no dedicated accounts, but rather the treasury is, in theory, "borrowing" excess SS receipts and issuing an IOU to SS. The amount of excess SS receipts, however, is dwindling with every year, and soon the IOUs will start to come due. Since the source of funds for both the treasury and the SS is the same -- us -- then this pathetic accounting game is nothing more than a gigantic farce.

The issue, of course, is changing demographics. Fewer workers for each person receiving SS, in significant part because people are doing us the tremendous inconvenience of living much longer than they used to.

The question is how to "fix" it. The program has been enormously successful by every measure, in greatly reducing or eliminating poverty among the elderly and increasing self-sufficiency. Our current societal structure has gotten tremendous benefit from this, as it is no longer the absolute rule that elderly parents must move in with their children (or vice versa) to ward off the specter of hunger or homelessness.

Options to improve SS long term prospects, without significantly undermining the rationale underlying the program, would include:

1. increasing the age at which recipients are entitled to get partial or full benefits.

2. increasing SS taxes, which are already significantly high -- higher in fact than state income taxes in many states that even have income taxes.

3. decreasing SS benefits.

4. redirecting/reallocating the methods by which excess SS receipts are "saved" for future expenditure.

Other proposals, which in my mind significantly undermine the original and continuing concept of SS would include:

1. removal of caps on the income to which SS taxes apply ($106,800 for 2010, usually increasing by inflation, more or less, annually).

2. means testing or other measures to reduce/eliminate those receiving benefits.

The idea proposed in this thread -- of a small percentage of SS taxes being redirected into private savings/investment accounts -- is little more than a feel-good insigificant band-aid to a looming crisis that needs dramatic structural reform. It is also far easier said than done, with the following questions immediately leaping to mind:

1. how is this money going to be managed?

2. who gets to decide investments? What investment options are permitted?

3. What brokerage houses will be used? Will investment advisers be involved? What percentages will they be allowed to earn? They will reap a tremendous windfall at taxpayers expense.

4. Will redirecting such a massive amount of money into hte market upset/unbalance the markets?

5. What effect will this redirection of funds have on the looming SS shortfall?

Frankly, dramatic SS reform is necessary. This is like slapping a Barney Band-aid on a sucking chest wound.

Taco John

08-27-2010, 12:58 PM

ROFL Has SS not worked exactly as designed so far? If we make minor changes to SS then it stays solvent for the foreseeable future.

You are a joke.

As far as I'm concerned, it doesn't matter what you do with Social Security until it becomes a voluntary program. My participation in it is against my will. I oblige because I don't want to be thrown in jail, but if I had my choice, my investment would be made in the market, not in government.

KC native

08-27-2010, 06:24 PM

Options to improve SS long term prospects, without significantly undermining the rationale underlying the program, would include:

1. increasing the age at which recipients are entitled to get partial or full benefits.

2. increasing SS taxes, which are already significantly high -- higher in fact than state income taxes in many states that even have income taxes.

3. decreasing SS benefits.

4. redirecting/reallocating the methods by which excess SS receipts are "saved" for future expenditure.

Other proposals, which in my mind significantly undermine the original and continuing concept of SS would include:

1. removal of caps on the income to which SS taxes apply ($106,800 for 2010, usually increasing by inflation, more or less, annually).

2. means testing or other measures to reduce/eliminate those receiving benefits.

I favor the removal of caps first, tinkering with the retirement age second, and third means testing.

The idea proposed in this thread -- of a small percentage of SS taxes being redirected into private savings/investment accounts -- is little more than a feel-good insigificant band-aid to a looming crisis that needs dramatic structural reform. It is also far easier said than done, with the following questions immediately leaping to mind:

1. how is this money going to be managed?

2. who gets to decide investments? What investment options are permitted?

3. What brokerage houses will be used? Will investment advisers be involved? What percentages will they be allowed to earn? They will reap a tremendous windfall at taxpayers expense.

4. Will redirecting such a massive amount of money into hte market upset/unbalance the markets?
.

These are the pertinent questions. My concern with it as well is that it would push the natural upward bias of the market more upward. Also, wall st would devise ways to work these funds to maximize their revenue and say to hell with the clients (in this case the general public). Putting the wolves in charge of guarding the hen house would not work for us.

BIG_DADDY

08-27-2010, 07:37 PM

As usual this thread has just turned into a mudslinging fest, and that's fine. I'll post something and then leave, as I don't have time for this at the moment.

The good news is that Social Security has worked more or less precisely as originally intended, and has been a successful program by nearly any standard one wishes to apply during its 70-odd years of existence.

The bad news, however, is that it is growing increasingly untenable, and needs a dramatic overhaul to continue to survive for very much longer. In order to disguise their profilgate spending, Congress and the President (Reagan) brought Social Security onto the budget, combining the SS receipts (which were net positive) with the general ledger (which was net negative), thereby hiding just how big the deficit was. There are, of course, no dedicated accounts, but rather the treasury is, in theory, "borrowing" excess SS receipts and issuing an IOU to SS. The amount of excess SS receipts, however, is dwindling with every year, and soon the IOUs will start to come due. Since the source of funds for both the treasury and the SS is the same -- us -- then this pathetic accounting game is nothing more than a gigantic farce.

The issue, of course, is changing demographics. Fewer workers for each person receiving SS, in significant part because people are doing us the tremendous inconvenience of living much longer than they used to.

The question is how to "fix" it. The program has been enormously successful by every measure, in greatly reducing or eliminating poverty among the elderly and increasing self-sufficiency. Our current societal structure has gotten tremendous benefit from this, as it is no longer the absolute rule that elderly parents must move in with their children (or vice versa) to ward off the specter of hunger or homelessness.

Options to improve SS long term prospects, without significantly undermining the rationale underlying the program, would include:

1. increasing the age at which recipients are entitled to get partial or full benefits.

2. increasing SS taxes, which are already significantly high -- higher in fact than state income taxes in many states that even have income taxes.

3. decreasing SS benefits.

4. redirecting/reallocating the methods by which excess SS receipts are "saved" for future expenditure.

Other proposals, which in my mind significantly undermine the original and continuing concept of SS would include:

1. removal of caps on the income to which SS taxes apply ($106,800 for 2010, usually increasing by inflation, more or less, annually).

2. means testing or other measures to reduce/eliminate those receiving benefits.

The idea proposed in this thread -- of a small percentage of SS taxes being redirected into private savings/investment accounts -- is little more than a feel-good insigificant band-aid to a looming crisis that needs dramatic structural reform. It is also far easier said than done, with the following questions immediately leaping to mind:

1. how is this money going to be managed?

2. who gets to decide investments? What investment options are permitted?

3. What brokerage houses will be used? Will investment advisers be involved? What percentages will they be allowed to earn? They will reap a tremendous windfall at taxpayers expense.

4. Will redirecting such a massive amount of money into hte market upset/unbalance the markets?

5. What effect will this redirection of funds have on the looming SS shortfall?

Frankly, dramatic SS reform is necessary. This is like slapping a Barney Band-aid on a sucking chest wound.

The sooner we act the less dramatic the changes need to be. When making these changes the first thing we need to look at is why it's failing and allowing it to continue to be a slush fund for congress is not the answer. There simply must be accounts and accoutability. I also have no problem with people choosing to have all or at least half of this money in the markets based upon an agreed to allocation parameters. The amount they are allowed to use in this fasion should increase based upon what they have put in. Obviously you would have to allow them to seek help in choosing appropriate investments.

We would have to be nuts to means test it. Social Security already makes distinctions based on income. Lower-wage earners get a higher return on their contributions. Higher-income retirees pay income tax on a portion of their benefits. Given these progressive features, it's not logical to add a means test. In fact, Social Security is far more progressive than any other retirement program. It would also be highly unfair and there would be negative cosequences like people not saving as much so they get their benefits or retiring early robbing themself and our economy. The whole concept of a means test is unfair and unamerican.

BIG_DADDY

08-27-2010, 07:45 PM

I favor the removal of caps first, tinkering with the retirement age second, and third means testing.

These are the pertinent questions. My concern with it as well is that it would push the natural upward bias of the market more upward. Also, wall st would devise ways to work these funds to maximize their revenue and say to hell with the clients (in this case the general public). Putting the wolves in charge of guarding the hen house would not work for us.

1. I would have expected no less from you.

2. The fact that you don't realize much of this could be alleviated doesn't surprise me or the fact that you think a slush fund is superior system to create fiscal responsibility and accountability.

alnorth

08-27-2010, 09:16 PM

The bad news, however, is that it is growing increasingly untenable, and needs a dramatic overhaul to continue to survive for very much longer. In order to disguise their profilgate spending, Congress and the President (Reagan) brought Social Security onto the budget, combining the SS receipts (which were net positive) with the general ledger (which was net negative), thereby hiding just how big the deficit was. There are, of course, no dedicated accounts, but rather the treasury is, in theory, "borrowing" excess SS receipts and issuing an IOU to SS. The amount of excess SS receipts, however, is dwindling with every year, and soon the IOUs will start to come due. Since the source of funds for both the treasury and the SS is the same -- us -- then this pathetic accounting game is nothing more than a gigantic farce.

Not to say that social security is in great health or anything, some tweaks are clearly needed since we are living longer and the number of people getting checks relative to number of workers will increase...

...but this whole "the government stole the social security money and wrote out IOU's" is nothing more than slick marketing by politicians looking to get votes. It is a problem for our budget, but the trust fund is not some fake thing like a $50 loan to a buddy that he wont pay back. The following may read like irrelevant semantics, but its important, because people get worked up over "the trust fund was spent!" instead of issues that deserve more attention. ("look what we are doing to our budget!, we need to cut down on entitlement costs and defense spending!")

By law, the social security trust fund is not allowed to invest in anything but US bonds or other similar investments where both principle and interest is guaranteed by the US government. At last accounting, the Social Security trust fund was valued at about $2.4T, invested in special U.S. Securities which accrue interest (4.86% in 2009) and can be called when needed. These securities are backed by the full faith and credit of the government, and are basically like treasuries. Those investments do have value. If you believe the Social Security Trust fund is valueless, then so are US savings bonds, all those Treasuries that China bought, etc.

Now, obviously when those bonds have to be redeemed to pay benefits, it will force the US to raise money. (either by selling more treasuries which increases the debt, or by taxes, or by printing the money and inflating the debt away) but what do you think happens when the US sells treasuries every year? When you buy treasuries, the government takes that money and spends it on whatever crazy crap they want. When you are paid back, the government has to raise the funds to give you your money back. There's no difference between what your grandma may be doing with her treasuries and what social security is doing, they both lend money to the government with interest. The fund is real, the money has to be paid when social security needs it, and defaulting sure as hell isn't an option. (our credit goes in the toilet, and no one will lend us money any more)

If you want to be concerned, be concerned about what social security might do to our budget if it isn't fixed. This "OMG we spent the trust fund!" concern is nonsense, unless you believe the trust fund should have been invested in the stock market (not currently allowed) or sat in a bank account doing nothing and earning no interest (also not currently allowed).

alnorth

08-27-2010, 09:33 PM

I favor the removal of caps first, tinkering with the retirement age second, and third means testing.

According to the math I've seen from the pension actuaries, we probably dont need to resort to means-testing. Some simple (but maybe politically difficult) adjustments are needed to put off exhausting the trust fund out to the forseeable future. (over 100+ years)

If you quickly raise the retirement age 1 year (67) and gradually raise it until it is 70 for people born after 2024, that solves about a fourth of the problem. Uncapping the income limits that are taxable (but dont raise the benefits for those paying more, otherwise it mostly washes out) would take care of the rest. Problem solved, at least until we increase our life expectancy another 4 or 5 years.

Here's a Social Security solution game (http://www.actuary.org/socialsecurity/game.html) you can play (intended to be non-partisan, and include almost all proposed solutions for you to pick from), created by the American Academy of Actuaries.

Taco John

08-27-2010, 10:46 PM

Means testing.

It always amuses me that people loudly complain when others call them socialists or communists, but then they advocate such things as means testing. Means testing is the heart of both socialism and communism (which is redundant, I know, because socialism is the heart of communism).

BIG_DADDY

08-27-2010, 11:32 PM

Means testing.

It always amuses me that people loudly complain when others call them socialists or communists, but then they advocate such things as means testing. Means testing is the heart of both socialism and communism (which is redundant, I know, because socialism is the heart of communism).

You're so stupid, it's not communism it's called being progressive and our punish good behavior and reward bad behavior value system is the new America, get used to it.

KC native

08-27-2010, 11:33 PM

1. I would have expected no less from you.

2. The fact that you don't realize much of this could be alleviated doesn't surprise me or the fact that you think a slush fund is superior system to create fiscal responsibility and accountability.

You didn't pay much attention to 2005 til now huh? If you think Wall St, barring radical regulation, can't get around those hurdles then you are dumber than I thought.

Taco John

08-28-2010, 02:09 AM

You didn't pay much attention to 2005 til now huh? If you think Wall St, barring radical regulation, can't get around those hurdles then you are dumber than I thought.

It's good to know that radical regulation will solve everything. I wonder what we're waiting for?

donkhater

08-28-2010, 08:49 AM

The scariest phrase in this whole thread is also the most correct:

Social Security has worked, more or less, how it was intended.

Dave Ramsey made a point on his radio program the other day about SS. If you invest ~$340/year (or only 3% of a minimum wage salary) in reasonably well managed mutual funds from the time you are 20 until you are 70 (50 years) it should be worth over $1.5 million. That is the WORST case scenario. Who earns minimum wage their entire life??

Even if you do, you could easily live off the interest at a MUCH higher standard of living than minimum wage AND when you die, you can pass it onto your heirs. The money that you put into SS doesn't go anywhere when you pass.

This should scream to people what a colossel waste SS is. The capital that would be available for the economy is tied up in a Ponzi scheme of immense proportions. But sadly and morbidly funny, it is doing what it was intended to do. Which should scare people silly.

alnorth

08-28-2010, 09:24 AM

The scariest phrase in this whole thread is also the most correct:

Social Security has worked, more or less, how it was intended.

Dave Ramsey made a point on his radio program the other day about SS. If you invest ~$340/year (or only 3% of a minimum wage salary) in reasonably well managed mutual funds from the time you are 20 until you are 70 (50 years) it should be worth over $1.5 million. That is the WORST case scenario. Who earns minimum wage their entire life??

Even if you do, you could easily live off the interest at a MUCH higher standard of living than minimum wage AND when you die, you can pass it onto your heirs. The money that you put into SS doesn't go anywhere when you pass.

This should scream to people what a colossel waste SS is. The capital that would be available for the economy is tied up in a Ponzi scheme of immense proportions. But sadly and morbidly funny, it is doing what it was intended to do. Which should scare people silly.

You also need to realize what social security is intended to be. It is not an investment. There's a reason the word "social" is in there, it is a weird form of social insurance. Poor people who aren't able to put much in, and spouses/widows who literally never put a single dime into the system get far more than they put in. Middle-class and wealthy people may get back what they put in if they live long enough, but not much interest.

Social Security is just intended to ensure that the most unfortunate (and the laziest) among us are not eating dog food. It is not an investment, it is a social program that we are all forced to support.

They could have just as easily raised all our taxes and started a new program called "free money for old people who are broke", but by doing it this way, the rest of us at least get something out of it just to cut off most of the complaints when we get old enough to say "well dang it, I paid into this scheme all my life, you aren't taking away what little I'm gonna get out of it!"

Edit: I checked the math, and it doesn't work. I think you must have mis-heard the details of what Ramsey said. 340/year for 50 years with a goal of $1.5MM would require about a 13.7% interest rate. If we assume 6% (sounds good to me for absolute worst case over 50 years) you need to put in 5,166/year to reach $1.5MM.

2bikemike

08-28-2010, 10:22 AM

The scariest phrase in this whole thread is also the most correct:

Social Security has worked, more or less, how it was intended.

Dave Ramsey made a point on his radio program the other day about SS. If you invest ~$340/year (or only 3% of a minimum wage salary) in reasonably well managed mutual funds from the time you are 20 until you are 70 (50 years) it should be worth over $1.5 million. That is the WORST case scenario. Who earns minimum wage their entire life??

Even if you do, you could easily live off the interest at a MUCH higher standard of living than minimum wage AND when you die, you can pass it onto your heirs. The money that you put into SS doesn't go anywhere when you pass.

This should scream to people what a colossel waste SS is. The capital that would be available for the economy is tied up in a Ponzi scheme of immense proportions. But sadly and morbidly funny, it is doing what it was intended to do. Which should scare people silly.

Ding Ding Ding Winner Winner! This post says it all right here. I can only imagine what my retirement outlook would be if I could have invested the money I and my employer have contributed to the Pyramid Scheme called Social Security.

Taco John

08-28-2010, 10:29 AM

Social security has worked how it was intended: as a slush fund that gives them a deep ledger to play accounting games with while at the same time providing political cover due to the dependancy the program creates in society.

donkhater

08-28-2010, 01:00 PM

You also need to realize what social security is intended to be. It is not an investment. There's a reason the word "social" is in there, it is a weird form of social insurance. Poor people who aren't able to put much in, and spouses/widows who literally never put a single dime into the system get far more than they put in. Middle-class and wealthy people may get back what they put in if they live long enough, but not much interest.

Social Security is just intended to ensure that the most unfortunate (and the laziest) among us are not eating dog food. It is not an investment, it is a social program that we are all forced to support.

They could have just as easily raised all our taxes and started a new program called "free money for old people who are broke", but by doing it this way, the rest of us at least get something out of it just to cut off most of the complaints when we get old enough to say "well dang it, I paid into this scheme all my life, you aren't taking away what little I'm gonna get out of it!"

Edit: I checked the math, and it doesn't work. I think you must have mis-heard the details of what Ramsey said. 340/year for 50 years with a goal of $1.5MM would require about a 13.7% interest rate. If we assume 6% (sounds good to me for absolute worst case over 50 years) you need to put in 5,166/year to reach $1.5MM.

Admittedly, Ramsey is very generous with his veiw on investments. Regardless, the final sum even with a historically accurate interest rte equals a sizable stock pile of money. Even for someone earning minimum wage.

I don't discount the use of the word 'social' although I suspect you see that word with a different implication than I do.

The Social Security Act may as well been named the Doing your duty as Patriotic Americans Act. Mooch would be proud.

donkhater

08-28-2010, 01:19 PM

You also need to realize what social security is intended to be. It is not an investment. There's a reason the word "social" is in there, it is a weird form of social insurance. Poor people who aren't able to put much in, and spouses/widows who literally never put a single dime into the system get far more than they put in. Middle-class and wealthy people may get back what they put in if they live long enough, but not much interest.

Social Security is just intended to ensure that the most unfortunate (and the laziest) among us are not eating dog food. It is not an investment, it is a social program that we are all forced to support.

They could have just as easily raised all our taxes and started a new program called "free money for old people who are broke", but by doing it this way, the rest of us at least get something out of it just to cut off most of the complaints when we get old enough to say "well dang it, I paid into this scheme all my life, you aren't taking away what little I'm gonna get out of it!"

Edit: I checked the math, and it doesn't work. I think you must have mis-heard the details of what Ramsey said. 340/year for 50 years with a goal of $1.5MM would require about a 13.7% interest rate. If we assume 6% (sounds good to me for absolute worst case over 50 years) you need to put in 5,166/year to reach $1.5MM.

Yes defenders of SS love to use the argument of defending the poor and the widowed to maintain this ridiculous arrangement. It is very convienient to paint those wanting the repel of such a program as unfeeling or hateful.

They ask, "Where's your humanity", when it is programs such as these that are most responsible for the decline of humanity in America. Where is the faith in your fellow American to come to the aid of those in need? How many times when disaster strikes over and over in the world have average Americans donated millions of dollars in aid? The belief that they wouldn't come to the aid of the needy in the absence of SS isn't one founded with any evidence since SS has been around for over 60 years. Why would the average American respond when it is their belief that the government is already taking care of it thorough these types of programs? See how these programs have anesthetized the public for good works?

Take it one step further. The slow steady takeover of our healthcare has reduced us to criticizing each others eating habits and lifestyles. Taxing this food and that because it leads to obesity. Notice how requiring someone to pay for someone else's 'right' only results in the decline of public humanity? A poor women has a bunch of kids and everyone is upset because she is bilking the welfare system not about the welfare of the children!! What has created this attitude? The private sector? Ordinary citizens?

alnorth

08-28-2010, 01:21 PM

I don't discount the use of the word 'social' although I suspect you see that word with a different implication than I do.

The Social Security Act may as well been named the Doing your duty as Patriotic Americans Act. Mooch would be proud.

I look at social security as "well, fine. It could have been much worse"

Imagine if we had no safety net today with Obama and a congress full of dems and we were trying to solve a problem with old people not saving enough money or getting hit with unexpected expenses, living like bums, eating dog food, etc.

I doubt we'd end up with social security today, probably more like "hi, we're taking your sh**, we got old people to feed." At least this way if I manage to beat the odds and live to 90, I just may possibly end up getting my money back as an interest-free loan to the government, vs just a big fat tax that I'll never get anything from.

alnorth

08-28-2010, 01:29 PM

They ask, "Where's your humanity", when it is programs such as these that are most responsible for the decline of humanity in America. Where is the faith in your fellow American to come to the aid of those in need? How many times when disaster strikes over and over in the world have average Americans donated millions of dollars in aid? The belief that they wouldn't come to the aid of the needy in the absence of SS isn't one founded with any evidence since SS has been around for over 60 years. Why would the average American respond when it is their belief that the government is already taking care of it thorough these types of programs? See how these programs have anesthetized the public for good works?

1) you have me confused with some wild-eyed protestor yelling "keep your government hands off my social security!" I just simply recognize why we have social security, why it is probably necessary, and I believe we got off easy. What do you think today's congress would have done?

2) It is easy to donate money in a disaster. We're talking maybe a few tens or hundreds of millions a year. Maybe a billion in a good tragedy. Without social security, people will have more money, but those same people probably would have blown it on stupid crap or a higher lifestyle, so the liabilities when they get older would not diminish.

Social Security will cost us trillions and trillions over the next few years alone. We paid out about $700B in social security and disability benefits in 2009. (collected about $800B) Lets be generous and assume half of it was to people who didnt really need the money or would have saved it wisely to have no liability today. Do you really think we'll donate $350B per year, every single year, adjusted for inflation, forever? 9/11 and hurricanes are one thing, you are asking people to open their wallets for some random grandpa who made bad choices and is now hungry.

Assuming the answer is (obviously) no, and assuming we wont let him starve, I suspect the liberals today would have simply jacked our taxes to pay for it. No thanks. I'd prefer to at least be given a fighting chance to maybe get my money back if I live long enough.

Chiefshrink

08-28-2010, 01:42 PM

Native says - The Govt. will take care of you and is looking out for you. You know like when they experimented with Nukes in the 1950's and irradiated our own troops, like when they made sure we were safe after the Embassy bombings in the 90's so there wouldn't be a 9/11. Katrina, BP oil spill oversite and regulation. Securing our borders.

Anyone who trusts the Govt. to look out for them is going to get screwed.

:clap::clap::clap::clap::clap::clap::clap::clap::clap:

Chiefshrink

08-28-2010, 01:47 PM

I look at social security as "well, fine. It could have been much worse"

Fine? That's an illusion my friend. SS is totally bankrupt and we as nation are totally living on borrowed credit from the Chicoms. And trust me if things keep going the way they are you will not want to live to an old age.:thumb:

BIG_DADDY

08-28-2010, 02:33 PM

I look at social security as "well, fine. It could have been much worse"

Imagine if we had no safety net today with Obama and a congress full of dems and we were trying to solve a problem with old people not saving enough money or getting hit with unexpected expenses, living like bums, eating dog food, etc.

I doubt we'd end up with social security today, probably more like "hi, we're taking your sh**, we got old people to feed." At least this way if I manage to beat the odds and live to 90, I just may possibly end up getting my money back as an interest-free loan to the government, vs just a big fat tax that I'll never get anything from.

It could have been and still can be much better but for some reason you don't want to address that.

alnorth

08-28-2010, 02:34 PM

Fine? That's an illusion my friend. SS is totally bankrupt and we as nation are totally living on borrowed credit from the Chicoms. And trust me if things keep going the way they are you will not want to live to an old age.:thumb:

Bankrupt? Maybe in 2040-2050 if we make absolutely no changes (they will), but right now social security has almost $2.5 trillion.

alnorth

08-28-2010, 02:35 PM

still can be much better but for some reason you don't want to address that.

We can also debate how cool it would be if unicorns existed as a domestic animal to ride around. I'm dealing with reality. In reality, what we have is the best (least bad) solution that is politically possible under any circumstance.

2bikemike

08-28-2010, 02:45 PM

IMHO a side affect of Social Security and all social handouts is that it relieves certain individuals of the responsibity to provide for ones self. This is a perpetuating cycle. That creates a huge population of people who rely strictly on the Govt. to take care of them.

Its like the old addage. Feed a man a fish you feed him for a day. Teach a man to fish and you feed him for life.

BIG_DADDY

08-28-2010, 02:49 PM

We can also debate how cool it would be if unicorns existed as a domestic animal to ride around. I'm dealing with reality. In reality, what we have is the best (least bad) solution that is politically possible under any circumstance.

During the height of Bush's popularity, when the GOP had firm control of congress, when the stock market was soaring to unlimited heights, when people were making money and started thinking that investing in the market was a safe road of prosperity lacking even the smallest of forseeable bumps...

in that climate, the people still said no to even a very modest proposal to let you control a tiny percent.

GOP: "But... you could make more money!"

People: "we heard you the first time. no"

GOP: "here are some projections showing what could happen, look at what Chile did, we promise we'll not harm the old people who currently depend on social security, this makes perfect sense!"

People: "did we stutter? We said no. If you keep talking about this, we'll get pissed off and start electing democrats."

That was before the great recession. How the hell do you propose to convince the people to do anything but minor tweaks to keep it going? We're lucky that we get anything at all from this, and its not just outright "broke-ass old people welfare".

2bikemike

08-28-2010, 03:15 PM

Well, ok.

During the height of Bush's popularity, when the GOP had firm control of congress, when the stock market was soaring to unlimited heights, when people were making money and started thinking that investing in the market was a safe road of prosperity lacking even the smallest of forseeable bumps...

in that climate, the people still said no to even a very modest proposal to let you control a tiny percent.

GOP: "But... you could make more money!"

People: "we heard you the first time. no"

GOP: "here are some projections showing what could happen, look at what Chile did, we promise we'll not harm the old people who currently depend on social security, this makes perfect sense!"

People: "did we stutter? We said no. If you keep talking about this, we'll get pissed off and start electing democrats."

That was before the great recession. How the hell do you propose to convince the people to do anything but minor tweaks to keep it going? We're lucky that we get anything at all from this, and its not just outright "broke-ass old people welfare".

I don't remember all the details of that fight, But what I do remember is that it was the Dems in Congress that put up the big stink and scare tactics. I am not saying your wrong about the people I just don't remember that.

But it is kinda ironic that the way you describe it sound a lot like the health care debate. Too bad that didn't go down in flames as well.

googlegoogle

08-28-2010, 04:57 PM

it's insane that they can take any of our wages.

healthpellets

08-28-2010, 05:02 PM

Wow, do you really want to give Wall Street access to, with their outstanding ethics track record, access to that reliable, steady, and tremendous stream of that cash?

i don't want to quote the remainder of your posts, but the real question i have is why oppose letting those who desire to control a very small part of their mandatory government investment?

the practicalities of doing so aren't relevant.

it's really just a question of why not.

and i have a feeling that a small percentage of individuals would actually do anything even if they had the option. so the worry of providing wall st with a stream of cash is probably overblown.

is the concern that poor folk wouldn't take advantage of this and continue to lag behind the wealthy?

alnorth

08-28-2010, 05:19 PM

I don't remember all the details of that fight, But what I do remember is that it was the Dems in Congress that put up the big stink and scare tactics. I am not saying your wrong about the people I just don't remember that.

But it is kinda ironic that the way you describe it sound a lot like the health care debate. Too bad that didn't go down in flames as well.

Well, for the dems, universal health care is one of those core issues, and by core I mean "we achieve this at all costs, it is the reason our party exists at all" issues. The GOP was not willing to die on that "invest 4% of your social security" hill.

Instead of the last line, the end of that health care story went like:

People and Old People: What!?! How dare you... rabble! rabble rabble rabble!

November 2010: and in yesterday's congressional elections, the republican party won 49 seats in the house, 7 in the senate. President Obama pledged to work with the new bipartisan congress, blah blah blah.

tmax63

08-29-2010, 08:24 AM

SS can't be saved without drastic measures, those who say minor changes are needed are kidding yourself. When SS was created you had around 40 people paying in for every beneficary. Today you have less than 3 people paying in for each beneficary. Within a few years it will be at 2 due to changing demographics (the aging of the baby boomers). Means testing, in my opinion, would help restore it to what was originly intended but would be extremely hard to pass since it would exclude many of the folks that are paying in from ever receiving it and would be a naked case of forced income redistribution which is the current goal of leftists. The old way of stronger family units and kids taking care of their parents with charity helping the few that fell thru the cracks that worked for our country for 150 years prior to the creation of SS has been pretty much dismantled in the last 75 years and since the genie has been let out of the bottle and it will never be returned. I'm not optimistic that the USA will be around in 50 years the way we know it now much less another 200.

Lex Luthor

08-29-2010, 09:07 AM

As usual this thread has just turned into a mudslinging fest, and that's fine. I'll post something and then leave, as I don't have time for this at the moment.

The good news is that Social Security has worked more or less precisely as originally intended, and has been a successful program by nearly any standard one wishes to apply during its 70-odd years of existence.

The bad news, however, is that it is growing increasingly untenable, and needs a dramatic overhaul to continue to survive for very much longer. In order to disguise their profilgate spending, Congress and the President (Reagan) brought Social Security onto the budget, combining the SS receipts (which were net positive) with the general ledger (which was net negative), thereby hiding just how big the deficit was. There are, of course, no dedicated accounts, but rather the treasury is, in theory, "borrowing" excess SS receipts and issuing an IOU to SS. The amount of excess SS receipts, however, is dwindling with every year, and soon the IOUs will start to come due. Since the source of funds for both the treasury and the SS is the same -- us -- then this pathetic accounting game is nothing more than a gigantic farce.

Excellent post, and I agree with nearly every word of it. Allowing the government to raid the Social Security Trust Fund is by far the worst case of embezzlement in history. Bernard Madoff is small potatoes compared to this.

One minor correction, however: The Social Security Trust Fund was brought into the unified budget by President Lyndon Johnson in 1968. Reagan signed a bill in 1983 to take it off-budget, but the Gramm-Rudman-Hollings Act of 1986 caused Social Security surpluses to once again be used to disguise the true amounts of budget deficits.

I guess the point I'm trying to make is that Reagan is not to blame for this fiasco. Both political parties are equally culpable here. If either party had really wanted to do something about it in the last quarter of a century, they would have. Both had plenty of opportunities when they controlled the Presidency and both houses of Congress.

http://www.ssa.gov/history/BudgetTreatment.html

KC native

08-29-2010, 12:30 PM

i don't want to quote the remainder of your posts, but the real question i have is why oppose letting those who desire to control a very small part of their mandatory government investment?

the practicalities of doing so aren't relevant.

it's really just a question of why not.

and i have a feeling that a small percentage of individuals would actually do anything even if they had the option. so the worry of providing wall st with a stream of cash is probably overblown.

is the concern that poor folk wouldn't take advantage of this and continue to lag behind the wealthy?

1. It isn't a government investment. It is a safety net.

2. Do you really think that Wall Street wouldn't engage in a massive campaign to get as many people as possible signed up so they could get as much money as possible? Wall Street is extremely good at what they do. Worrying about a mountainous stream of cash from this isn't overblown at all.

petegz28

08-29-2010, 01:33 PM

I would have no problems with it as long as the investment choices were limited to very conservative investments. Muni-bonds, Gov. bonds, money markets. No stock investments.

donkhater

08-29-2010, 07:46 PM

1. It isn't a government investment. It is a safety net.

2. Do you really think that Wall Street wouldn't engage in a massive campaign to get as many people as possible signed up so they could get as much money as possible? Wall Street is extremely good at what they do. Worrying about a mountainous stream of cash from this isn't overblown at all.

I don't know your age, native, but if you are under 40 like me and expect that SS won't be bankrupt and gone when retirement hits, you are a blind statist zombie.

KC native

08-29-2010, 07:50 PM

I don't know your age, native, but if you are under 40 like me and expect that SS won't be bankrupt and gone when retirement hits, you are a blind statist zombie.

If changes are made then SS will be there. If you believe otherwise, then, you are BEP.

Brock

08-29-2010, 07:56 PM

If changes are made then SS will be there. If you believe otherwise, then, you are BEP.

Changes, like raising the retirement age to 75? Some safety net.

alnorth

08-29-2010, 08:01 PM

Changes, like raising the retirement age to 75? Some safety net.

Who is saying 75? The highest I'm hearing is 70, gradually phased in, for people born a few years from now. (even then you can still always take it early at a reduced amount. The retirement age is now 66, but the vast majority grab a smaller benefit at 62) It really wont take much to make the system solvent for the next 100-plus years.

Amnorix

08-30-2010, 06:43 AM

I favor the removal of caps first, tinkering with the retirement age second, and third means testing.

I greatly disfavor turning the SS system into something that isn't fair or equitable. If you remove caps on taxing SS income, then you should also remove caps on SS benefits, which will no doubt prove unpopular down the road.

Means testign will inevitably result in alot of games being played with assets being hidden, etc. It is also, in my view, a complete betrayal of the principles of Social Security. If we want to redistribute wealth to the poor, then I think we should do it via means other than Social Security. It's not really a welfare system.

Amnorix

08-30-2010, 06:52 AM

By law, the social security trust fund is not allowed to invest in anything but US bonds or other similar investments where both principle and interest is guaranteed by the US government. At last accounting, the Social Security trust fund was valued at about $2.4T, invested in special U.S. Securities which accrue interest (4.86% in 2009) and can be called when needed. These securities are backed by the full faith and credit of the government, and are basically like treasuries. Those investments do have value. If you believe the Social Security Trust fund is valueless, then so are US savings bonds, all those Treasuries that China bought, etc.

The problem is that all those chickens come home to roost in the same spot. It's more your right pocket telling your left pocket that it owes it some money.

Ultimately, the only source of funds for either SSA or the federal government itself the US government is the US taxpayer. Or to be more technically precise, 100% of the source of fudns for the SSA and, I dunno, maybe 95% of the source of funds for the US government, is the US taxpayer.

So when SS needs to call the loans or get paid on the amounts due, what happens? Taxes will need to go up. Whether its SS taxes or regular income taxes doesn't much matter. The point is that there isn't a separate revenue stream guaranteeing the obligation.

The fund is real, the money has to be paid when social security needs it, and defaulting sure as hell isn't an option. (our credit goes in the toilet, and no one will lend us money any more)

The issue isn't whether the US defaults. Obviously it won't. The issue si that there is no source of funds to repay the SSA except us. Which is the same source that SSA could tap into.

What has really happened is that the current SS tax is artifically high in order to cover losses in the government's general ledger so it doesn't have to borrow as much from "foreign" (non governmental) sources. Whether those funds will ever be repaid isn't in question -- it's irrelevant. What is relevant is that there is no fund, never was, and never will be. It's an accounting game to hide the true size of the deficit by using overfunding of SSA to cover losses elsewhere.

Amnorix

08-30-2010, 06:53 AM

Means testing.

It always amuses me that people loudly complain when others call them socialists or communists, but then they advocate such things as means testing. Means testing is the heart of both socialism and communism (which is redundant, I know, because socialism is the heart of communism).

Oddly, I've never seen means testing involved in any definition of communism or socialism. Which probably isn't that odd, actually, because means testing doesn't have much to do with socialism or -- especially -- communism, which involves words like "controlling the levers of commerce", "private ownership" and "industry", and not so much "means testing".

Nevertheless, I strongly oppose it for SS.

Amnorix

08-30-2010, 06:55 AM

Dave Ramsey made a point on his radio program the other day about SS. If you invest ~$340/year (or only 3% of a minimum wage salary) in reasonably well managed mutual funds from the time you are 20 until you are 70 (50 years) it should be worth over $1.5 million. That is the WORST case scenario. Who earns minimum wage their entire life??

I'd love ot hear the assumptions on this $1.5 million. 8% per year, perhaps? Tell me where I can get that, every year and I'll be the first one in.

The reality is that it's not 1/1000th that easy...

Amnorix

08-30-2010, 07:01 AM

it's insane that they can take any of our wages.

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

.

alnorth

08-30-2010, 07:09 AM

The issue isn't whether the US defaults. Obviously it won't. The issue si that there is no source of funds to repay the SSA except us. Which is the same source that SSA could tap into.

What has really happened is that the current SS tax is artifically high in order to cover losses in the government's general ledger so it doesn't have to borrow as much from "foreign" (non governmental) sources. Whether those funds will ever be repaid isn't in question -- it's irrelevant. What is relevant is that there is no fund, never was, and never will be. It's an accounting game to hide the true size of the deficit by using overfunding of SSA to cover losses elsewhere.

I object more to the US government playing accounting games within the budget than the trust fund being invested in securities that are basically like treasuries. We should be honest and recognize the debt we owe to social security just as we do the debt from selling treasuries to china. Our debt and the interest we pay is higher than what we are admitting.

But, that can be fixed immediately by one congress. New law saying we'll stop lying in our accounting, done, the national debt is higher.

The social security trust fund is real, and I have no objections to lending it to the government, because they still would have borrowed the same amount of money. If we would have had a law 30 years ago forbidding the government from borrowing from the trust fund, and it could only be invested in private equities, bonds, etc, the USA still would have borrowed that money, It just would have come from additional money from China or whoever. If we suddenly had less and less need to borrow money because of financial discipline, increased income, or whatever, social security is the last thing I'd stop borrowing from. If I have to pay someone interest, I'd rather it be to our own retirees than a foreign government. So, I'm not offended in the slightest that the government is borrowing from the trust fund since they would have borrowed that amount of money anyway, I'm more annoyed that the government is lying about it.

alnorth

08-30-2010, 07:26 AM

I greatly disfavor turning the SS system into something that isn't fair or equitable. If you remove caps on taxing SS income, then you should also remove caps on SS benefits, which will no doubt prove unpopular down the road.

Means testign will inevitably result in alot of games being played with assets being hidden, etc. It is also, in my view, a complete betrayal of the principles of Social Security. If we want to redistribute wealth to the poor, then I think we should do it via means other than Social Security. It's not really a welfare system.

Lets not kid ourselves, social security is not like a pension where your contributions (or contributions made on your behalf by the company) have a one-to-one relationship to your projected benefit.

Social Security is GREATLY tilted to favor the poor and to disfavor the upper middle class and rich. Means testing (which I dont favor, but I wouldn't mind uncapping the income limit) would just make it even more unfair.

The contribution to benefit line is basically like a logarithmic curve:

If you have a low income all your life and make a small contribution to social security, you get a great benefit exaggerated beyond your contributions. Make a little more money, you get a higher benefit, but it is a diminishing return, the present value of the increased benefit is not as much as the increased amount you put in. When you are in the higher income brackets, that last huge chunk of money is barely worth much of a higher benefit at all.

So, it isn't outright welfare, but social security is not a completely fair pension system either. It is basically a social program that borrows money from the wealthy and middle class to help the poor, where the net payers into the system might possibly get their money back someday (with little or no interest) if they live long enough.

KC native

08-30-2010, 01:49 PM

Lets not kid ourselves, social security is not like a pension where your contributions (or contributions made on your behalf by the company) have a one-to-one relationship to your projected benefit.

Social Security is GREATLY tilted to favor the poor and to disfavor the upper middle class and rich. Means testing (which I dont favor, but I wouldn't mind uncapping the income limit) would just make it even more unfair.

The contribution to benefit line is basically like a logarithmic curve:

If you have a low income all your life and make a small contribution to social security, you get a great benefit exaggerated beyond your contributions. Make a little more money, you get a higher benefit, but it is a diminishing return, the present value of the increased benefit is not as much as the increased amount you put in. When you are in the higher income brackets, that last huge chunk of money is barely worth much of a higher benefit at all.

So, it isn't outright welfare, but social security is not a completely fair pension system either. It is basically a social program that borrows money from the wealthy and middle class to help the poor, where the net payers into the system might possibly get their money back someday (with little or no interest) if they live long enough.

This exactly. IMO, SS is a safety net. If you want to live nice during retirement then save for it. If you just want to get by, just use SS.

healthpellets

08-30-2010, 01:55 PM

why isn't it a 1:1?

Amnorix

08-30-2010, 02:08 PM

why isn't it a 1:1?

1:1 what? $1 for each $1 you put in? It wasn't designed to be. Never was.

You have the vagaries of inflation, life expectancy and the fact that it's nto a guaranteed "lockbox" account for you and you alone. It's a social safety net program, not an individually-owned asset.

Amnorix

08-30-2010, 02:12 PM

Lets not kid ourselves, social security is not like a pension where your contributions (or contributions made on your behalf by the company) have a one-to-one relationship to your projected benefit.

Social Security is GREATLY tilted to favor the poor and to disfavor the upper middle class and rich. Means testing (which I dont favor, but I wouldn't mind uncapping the income limit) would just make it even more unfair.

The contribution to benefit line is basically like a logarithmic curve:

If you have a low income all your life and make a small contribution to social security, you get a great benefit exaggerated beyond your contributions. Make a little more money, you get a higher benefit, but it is a diminishing return, the present value of the increased benefit is not as much as the increased amount you put in. When you are in the higher income brackets, that last huge chunk of money is barely worth much of a higher benefit at all.

So, it isn't outright welfare, but social security is not a completely fair pension system either. It is basically a social program that borrows money from the wealthy and middle class to help the poor, where the net payers into the system might possibly get their money back someday (with little or no interest) if they live long enough.

I don't disagree with any of that, but there is a limit to how far the concept can be stretched before it breaks. By design, by concept, it is not welfare like food stamps or whatever. It's a pay it forward system designed to eliminate/reduce poverty among the elderly, but to get benefits you need to pay in, and the benefits you do get are tied into what you paid in.